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How does depreciation expense difference from other operating expenses?
Wiki User
∙ 14y ago
Operating Expenses are the cost of doing business and are paid out of the company's cash or in some cases paid with Bonds, Stocks, or Dividends, either way, these expense will affect the Cash of the company and it's worth.
Their are two accounts for Depreciation one is Accumulated Depreciation. This is an Contra-Asset Account and is listed on the Balance Sheet under assets and is deducted from the related asset account.
Depreciation Expense is the expense we claim from Accumulated Depreciation and though it is an expense it does not affect our Cash. We do not actually "pay" this expense. Depreciation is the decline in usefulness of a Fixed Asset.
Remember, all Fixed Assets (except Land) lose their usefulness. Decreases in the usefulness of assets that are used in generating revenue are recorded as expenses. However, such decreases for fixed assets are difficult to measure. For this reason, a portion of the cost of the fixed asset is recorded as an expense each year for its useful life.
Wiki User
∙ 14y ago
Wiki User
∙ 14y agoThey differ in that depreciation is not a cash expense and other operating expenses are.
For example, if you pay for electricity in your office, you charge that electricity expense to operating expenses, as there is cash involved or even if you haven't paid cash yet,you most probably will,so it is a cash item.
In the case of depreciation, this is simply a spread of cost of asset over its useful life(cost/useful life), so there's actually no cash outflow to pay the depreciation expense.depreciation is simply reduction in asset value, but you are not paying any cash for it,so this is a non-cash item.
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Is depreciation a non operating expense?
28.04.2012 depreciation is part of operating expenses Popoola
Does office depreciation expense go on income statement?
yes, under operating expenses
Is depreciation expenses a non-cash expense?
is depreciation expense a non-cash expense
What is kind of operating expense is depreciation selling expense or general administrative expense?
Examples of operating expense ==> depreciation expense of a machine, impairment of goodwill Example of selling expense ==> advertising Example of general administrative expense ==> office expense
Why accumulated depreciation exceed depreciation expense?
Depreciation expenses is for one specific fiscal year while accumulated depreciation is the sum of all depreciation expenses that’s why accumulated depreciation exceeds the depreciation if there is depreciation expense in prior year as well.
Is depreciation an operating expense?
Depreciation is an operating expense but does not involve any cash flow. like salaries,rent insurance etc it is included in the P/L accounts.It is considered as operating because machinery/equipments or any property diminishes its value day by day.
Is loan interest is operating expense or non operating expenses?
Non-Operating Expense
Why depreciation is considered as non-cash item and comes under the heading of operating expenses in Income Statement?
Depreciation is a way to match expenses for an assets that was purchased in a different accounting cycle. As the assets produces income, the expenses of the asset is then matched in following accounting cycles. It is considered an operating expense, since the matching assets is used for business operations.
How are accumulated depreciation and depreciation related?
Accumulated depreciation and depreciation are related with each other as depreciation is annual expense while accumulated depreciation is the sum of all annual depreciation expenses.
How are accumulated depreciation and depreciation expensese related?
Accumulated depreciation and depreciation are related with each other as depreciation is annual expense while accumulated depreciation is the sum of all annual depreciation expenses.
How does depreciating expense differ from operating expenses?
Operating Expenses are the cost of doing business and are paid out of the company's cash or in some cases paid with Bonds, Stocks, or Dividends, either way, these expense will affect the Cash of the company and it's worth. Their are two accounts for Depreciation one is Accumulated Depreciation. This is an Contra-Asset Account and is listed on the Balance Sheet under assets and is deducted from the related asset account. Depreciation Expense is the expense we claim from Accumulated Depreciation and though it is an expense it does not affect our Cash. We do not actually "pay" this expense. Depreciation is the decline in usefulness of a Fixed Asset. Remember, all Fixed Assets (except Land) lose their usefulness. Decreases in the usefulness of assets that are used in generating revenue are recorded as expenses. However, such decreases for fixed assets are difficult to measure. For this reason, a portion of the cost of the fixed asset is recorded as an expense each year for its useful life.
How does depreciating expense differ from other expenses?
Depreciation is differ in this sense that depreciation is not a direct expense like other expenses rather it is the allocation of fixed asset cost over useful life of asset to income statement.
